Off the wire
• LME base metals close lower on Tuesday  • Tribal forces loyal to Hadi retake key southern province in Yemen  • Foreign exchange rate of Euro to other currencies  • Germany's benchmark DAX index loses over 180 points  • Libyan prime minister survives shooting attack  • World Bank aims at reducing poverty, promoting prosperity in Albania  • Portugal's Communist Party calls for debt to be renegotiated  • Roundup: U.S. stocks tumble amid economic data  • Italy welcomes China's tariffs reduction on imported consumer goods  • Work on Chinese-funded mega projects in Tanzania to begin this year: minister  
You are here: 　 Home

Clearing banks opening in Europe highlights increasing potential of RMB: Dagong Europe

Xinhua, May 27, 2015 Adjust font size:

The opening of Renminbi (RMB) clearing banks in Europe highlights the increasingly expected use of the RMB in the region and potential in global financial market, rating agency Dagong Europe said in a recent report.

In the past the currency was more used in Asia, being China's most active trade partner. In 2013 and 2014 four clearing banks have been inaugurated in Frankfurt, London, Luxembourg and Paris, the European branch of China-based Dagong Global Credit Rating Co., Ltd. said.

"The RMB clearing banks in Europe reflect the increased need of the international financial community to settle RMB transactions in an efficient and convenient way, reducing transactional and operational costs," Director of Financial Institutions Analytical Team at Dagong Europe Christina Sterr commented.

The most recent RMB clearing bank was inaugurated on April 14 in Qatar, the first to be located in the Middle East, following the opening of eight in Asia since 2012.

While the U.S. dollar and euro still lead the trade and investment currencies, the RMB's usage has increased. Dagong Europe noted the RMB has entered the top five of world payment currencies, recently overtaking both the Canadian dollar and the Australian dollar in terms of value.

Clearing banks have the core function of facilitating RMB-denominated financial transactions between international corporates and Chinese firms.

Dagong Europe said the potential for the RMB to consolidate its share in the international financial market is significant as a result of the increased importance of China as a global economic power and its share in global foreign direct investment.

In fact, with increased familiarity the RMB could expand not only to become a trade currency but be used as an alternative for investments, loans and other financial products, adding diversification to financial portfolios, the Milan-based agency underlined.

To further enhance the financial infrastructure around the RMB, in April 2015 the Chinese authorities announced their intention to introduce a new international payment system, called CIPS (China International Payment System) by the end of the year.

In Dagong Europe's view, CIPS should further facilitate international RMB transactions, though it may take time to ensure that it is efficient, secure and stable.

"That said, once established, a robust system would be a step further towards full RMB internationalization," Sector Head and Senior Director of Financial Institutions Analytical Team at Dagong Europe Carola Saldias said. Endit